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These are stories Report on Business is following Tuesday, Oct. 7, 2014.

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Follow the bouncing ball
The recent volatility in major currencies reminds me of the "take a penny, leave a penny" tray in the corner store when Canada still had a penny.

We've killed off the penny so there's no real need to borrow from, or add to, the tray any longer.

But the currency markets seem more than ready these days to take a penny or add a penny to the Canadian dollar.

(And, no, that's not why Canada's dollar coin is dubbed the loonie.)

On Friday, for example, the Canadian dollar tumbled by about a cent because of a one-two punch from a strong U.S. jobs number and a soft Canadian trade report.

Then yesterday, the loonie surged by about a penny, largely because of a pause in the rally of the U.S. dollar.

Today's moves haven't been as extreme, though the Canadian dollar has seen a high of 89.85 cents U.S. and a low of 89.32 cents amid a stronger greenback. By late in the day, the loonie sat at about 89.5 cents.

All of which, according to Bank of Nova Scotia's chief currency strategist, means opportunities for some but potential trouble for others.

"The market is in the midst of a USD bull rally; however the fundamental change is also driving higher volatility and uncertainty," Camilla Sutton said today, referring to the U.S. dollar by its symbol and citing the increasing daily volatility in the past couple of months compared to the previous months.

"We see this as a warning that as volatility rises, there are increasing opportunities for market participants; but hedge programs need to be approached with diligence."

It's about the same where the relationship between the U.S. dollar and the yen is concerned.

Looking at the moves in the Canadian dollar vs. the U.S. greenback, one way or the other, the average high-to-low range between April 9 and Sept. 9 was 0.49 of a penny, Ms. Sutton noted.

Extend that up until today, it's 0.56. And in the last month alone, it's 0.88.

There have also been eight days in the past month that have seen moves of about a cent, Ms. Sutton added.

For now, said senior currency strategist Sébastien Galy of Société Générale, the volatility is low from an historical perspective.

But there's a "but" there.

"The shocks to the USD remain moderate for now," Mr. Galy said.

"Nonetheless we are testing the edges of a broader correction in global risk that would lead the USD sharply higher, creating a self-enforcing loop."

This relates not only to moves by central banks, but also a "correction in the long-term uptrend" among commodity-linked currencies like the Canadian dollar.

"The Fed is in the process of eventually tightening liquidity, which 12 to 18 months down the road typically leads to higher implied volatility," Mr. Galy said.

"However, more liquidity originates from the ECB and BoJ," he added, referring to the European Central Bank and the Bank of Japan.

"For the USD its strength is combined with ECB/BoJ action to weaken their currencies."

The stronger U.S. economy helps support the loonie, sheltering it somewhat from the easing in commodity prices.

But even lower oil prices would hit the loonie "severely," Mr. Galy said, citing that as a risk only.

"This bearish thesis is likely to come back with more intensity in the coming months as we adjust to a world where [emerging markets expand] more slowly and advanced economies continue to generate weak growth."

Lobbying effort near payoff
A sustained Canadian lobbying effort to prevent Alberta oil sands output labeled as dirty oil in Europe is on the verge of paying off.

A new European Commission proposal officially released today would ensure that no transportation fuel supplied to the 28-country European Union, from diesel to compressed natural gas, would be penalized based on the carbon intensity of the base fuel, such as that from the oil sands, used to make the fuel that goes into cars and trucks, our European correspondent Eric Reguly reports.

"It is no secret that our initial proposal could not go through due to resistance faced in some member states," EC climate commissioner Connie Hedegaard said in a statement. "However, the commission is today giving this another push, to try and ensure that in the future, there will be a methodology and thus an incentive to choose less polluting fuels over more polluting ones like, for example, oil sands."

The proposal should open the door to more oil exports from Canada to Europe, though the potential market for Canadian oil would be limited by the European refineries ability, or lack thereof, to upgrade the heavy oil into light transportation fuels such as gasoline.

IMF cuts forecast
The International Monetary Fund cut its outlook for global economic growth, an acknowledgement that there are limits to the United States' ability to power the world economy on its own.

Gross domestic product in the U.S. will expand 2.2 per cent in 2014, the IMF said in a revised outlook today, a remarkable achievement given U.S. GDP contracted in the first quarter, our Washington correspondent Kevin Carmichael reports.

But the global economy no longer is a single-engine plane and the other motors are troubled. Economic growth in China remains strong, but it's slowing, and the IMF is worried the real estate market could crash. The bigger problems are in Europe and Japan, where demand is so weak that deflation remains a serious threat in both places.

Canada is among a group of advanced economies along with Britain, Norway and some others that the IMF characterized as "solid." The IMF raised its outlook for Canada's GDP growth this year to 2.3 per cent and in 2015 to 2.4 per cent, from 2.2 per cent and 2.3 per cent, respectively.

Regional disparity in Canada among widest
Regional disparity in Canada is among the widest in the developed world, a new report says.

Based on per-capita gross domestic product, Canada was home to the "third-largest regional disparities" across the countries in the Organization for Economic Co-operation and Development in 2010, the OECD study shows.

The OECD notes in its regional outlook, for example, that the difference between Alberta's low jobless rate and the high unemployment in Nunavut was a full 10.4 percentage points in 2012.

And looking at younger people, the OECD found that the youth unemployment rate across Canada was below the OECD average, but "remained high" in Newfoundland and Labrador.

The United States topped the list for regional disparity in the study.

"Inter-regional income disparities have widened in most OECD countries over recent decades; the crisis did little to change this trend," the report says.

"Where disparities have narrowed this has generally reflected weak performance in wealthier regions, rather than growth in poorer ones," it adds.

"The crisis has also accentuated disparities in unemployment across regions."

The report also notes how debt has climbed at levels below that of a national government, and Canada tops this list.

"Sub-national government debt per capita thus ranges from [$340 U.S.] in Greece to [$18,250 U.S.] for Canadian provinces," it says.

Rio says no
Speculation is rife today over the potential for the mother of all mergers, despite the fact that the target said no.

Rio Tinto PLC today outlined how Glencore Xstrata PLC approached the mining giant "regarding a potential merger" of the two in July.

"The Rio Tinto board, after consultation with its financial and legal advisers, concluded unanimously that a combination was not in the best interests of Rio Tinto's shareholders," it added.

"The board's rejection was communicated to Glencore in early August and there has been no further contact between the companies on this matter."

As these things go, of course, that doesn't necessarily mean all that much.

"Glencore courted Xstrata on and off for years before the merger was completed, which goes to show how persistent Glencore can be," market analyst David Madden of IG in London said today as Rio Tinto shares climbed.

"Rio Tinto knocked back a takeover offer worth £90-billion from BHP Billiton in 2008; it is now worth £58-billion and I doubt Rio Tinto will want to make the same mistake twice," he added.

"The broader mining sector is also reaping the rewards from the M&A story as takeover talks are never put to bed easily."

Building permits sink
Canada's construction industry pulled back in August, though that followed three strong months.

The value of building permits issued by cities across the country plunged 27.3 per cent in August, Statistics Canada said today, largely on weaker showings for non-residential construction in Quebec and residential building in Ontario.

"That significant retreat brought the year-on-year gain to a modest 2.4 per cent, with August's loss driven by a greater than 40-per-cent drop in non-residential permits - a fact that will hurt some of the hopes reserved for a sustainable turn higher in business investment," said Nick Exarhos of CIBC World Markets.

Remember that the August showing followed three months of double-digit gains.

And this is one indicator that is particularly volatile.

How to bug people
The folks behind a new mobile app have a report today on how to annoy your co-workers via e-mail.

The survey by MailTime, of course, is aimed at not annoying your co-workers. But if you want to get a rise out of someone, here are the top five mistakes:

  • E-mails that are “insensitive” in their tone, which 93 per cent of people don’t like.
  • E-mails that aren’t personally addressed, 88 per cent.
  • E-mails that have many replies, 87 per cent.
  • E-mails with “numerous recipients,” 82 per cent.
  • E-mails that run on, 81 per cent.

By the way, almost 20 per cent of people won't "fully read" an e-mail that's longer than a paragraph, and it goes up from there: 51 per cent won't read it if it's longer than two paragraphs, 76 per cent if it's longer than three, and 84 per cent if it's longer than four.

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